Who’s the Boss?

New research shows the huge economic value of effective supervisors and the surprising ways they make workers more effective.

What’s the value of a good boss? When the boss is a CEO, that question has been closely scrutinized. But the role of less exalted front-line supervisors—the folks who directly oversee teams of workers—has been overlooked. Do supervisors vary in quality? How valuable is a good one? And what makes a good one good? These are questions that preoccupy people in their daily work lives, but haven’t been the subject of much formal research.

That’s why it’s excellent that Kathryn Shaw and Edward Lazear of Stanford’s Graduate School of Business recently teamed up with the University of Utah’s Christopher Stanton to explore the subject in a working paper called “The Value of Bosses.”

Their research comes from a study of a large company (it’s kept anonymous as part of the terms under which it was conducted), but the results should be of interest to top-level managers at companies of all sizes. And, indeed, it’s smaller firms that probably have the most to learn from this sort of study, since they lack the scale to conduct an analysis in-house.

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Their answer is that, yes, good bosses are a good deal better than bad ones. Replacing a supervisor from the bottom 10 percent of the pool with one from the top 10 percent increases output about as much as adding a 10th worker to a nine-worker team.

That it’s better to have a good manager than a poor one isn’t very surprising. But the authors’ two other findings are a bit more striking. The main impact effective supervisors have on their employees doesn’t come from motivating or supervising them per se, it comes from teaching them better work methods. About two-thirds of the productivity boost from working under a good supervisor persists even after the worker switches bosses. That leads the authors to conclude that “teaching”—imparting better methods or skills—is the biggest part of effective supervision. The good boss effect does decay over time, however, so that after six months only about 18 percent of the boost remains.

The second finding is even more surprising: The most efficient structure is to assign the best workers to the best bosses rather than have the best bosses bring the weakest workers up to speed. “Maximizing the value of bosses requires that the better bosses be assigned to the better workers,” they conclude, because workers increase their output so much when working with star supervisors.

The research is drawn from a company that employs lots of workers to perform what they call a “technology-based service job.” They offer as examples of TBS jobs retail clerks, movie theater concession workers, airline gate agents, and call-center workers. These aren’t factory workers, in other words, but like the mass production workers of yore their jobs involve production of discrete objectively measurable outputs. That’s different from personal service workers like hair stylists (or Slate writers), whose outputs are heterogeneous and where productivity is driven by subjective quality as well as hourly output. The TBS kind of large-scale routinized work is good to study since it generates lots of data.

Of course, any boss out there should use caution before applying lessons gleaned from one firm to their own business. But smaller operations that simply don’t have the scale to repeat the large-scale data collection might want to take a leap of faith. Pay attention to your supervisors—and your own work in a supervisory role—as more than just a routine element of efficiency. Make sure your most promising workers are paired up with the best supervisors. And make it clear that teaching and learning are the essence of an effective boss/employee relationship. Good bosses don’t just crack the whip or deliver a pep talk, they deliver concrete improvements in workers’ ability to get the job done.

Editor's Note, Oct. 14, 2012: An incorrect version of this article was published on Oct. 12. It has since been updated and republished.